Medicaid claims audits slated for January

The Medicaid recovery Audit program is due to get implemented nationwide in January, carrying on in a similar vein as Medicare RAC program, as announced by CMS on 14th September, 2011. The Medicare RAC had recovered $451.3 million in overpayments and corrected $78.5 million in underpayment within six months in 2011.

The Dept. of Health and Human Services estimates that Medicaid RACs will save the program $2.1 billion over the next five years, of which $900 million will revert to the states. The states must implement Medicaid RACs by Jan. 1, 2012, according to the final ruling.

The states will enter into a contract with the Medicaid RACs, which will review the past claims that have already been paid and scrutinize them for fraud, waste and abuse. The auditors will be recompensed by getting a percentage of the funds they recover as having been inappropriately paid to doctors, hospitals and others. However, AMA has indicated its discomfort over the fact that RACs will be paid on the basis of their recoveries.

At the same time, the final rule also directs states to pay reviewers for uncovering underpayments that must be reimbursed to those filing the claims.

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The CMS has incorporated certain points in the Medicaid Audit program which were not present in the Medicare Audit program:

• Each Medicaid RAC must hire a physician as medical director
• The CMS has called upon the states to place a limit on the frequency and age of claims that Medicaid RACs can request from claimants for review
• Requiring states to coordinate their Medicaid RAC activities with those of other auditors; RACs cannot audit claims already being investigated by another entity
• Requiring RACs to return their fee if an overpayment determination is reversed at any level of appeal

The audit program is likely to aggravate the reimbursement as well as administrative burdens of the providers. Overall a need has been expressed for the CMS to take effective measures to educate providers as well as other health professionals to pre-empt inadvertent coding mistakes and the consequent incurring of penalties. In fact, these issues once again underscore the wisdom in utilizing trained and experienced billing and coding professionals well versed in handling RACs audits to pro-actively avoid auditor scrutiny.